Netflix dethrones iTunes as king of online movie business

Movie night. Netflix versus iTunes. Which do you choose?

Apple is no longer the dominant player when it comes to the US online movie business. According to a new report by market research firm IHS iSuppli, Netflix was crowned the new king in 2011 after a meteoric rise in popularity throughout 2010. The firm credits Netflix's success with its focus on TV-like subscriptions, which it sees as superior to the company's DVD mail service or iTunes' more traditional video on demand (VOD) model.

According to IHS' numbers, Netflix's share of the online movie market jumped from a mere 0.5 percent in 2010 to 44 percent in 2011. Comparatively, Apple fell from 60.8 percent in 2010 to just 32.3 percent in 2011. The number three player, Microsoft, also fell between 2010 and 2011—from 16.7 percent to 7.6 percent. The only other company in the IHS ranking that grew year over year was Vudu (owned by Walmart), which went from 2.7 percent in 2010 to 4.2 percent in 2011.

The market itself expanded during that time—in fact, it more than doubled to $992 million in 2011, and is expected to double again for 2012. This was apparently thanks to huge growth in subscription video on demand (SVOD) services, which is what IHS categorizes Netflix as, and has played into Netflix's success over the last couple years. Not only did Netflix bump its prices for video streaming during that time, it also made numerous deals with companies like Apple, Microsoft, Roku, and others to be included on their set-top boxes. As such, Netflix was suddenly everywhere in 2011, which boosted its popularity.

One thing IHS points out is that SVOD services like Netflix tend to carry older movies while VOD services like iTunes focus more on new releases. “Effectively the market has split,” IHS Director Dan Cryan said in a statement. “Netflix and Apple are competing for some of the same consumer time and money. However, the core value proposition of the two services is actually very different.”

To be honest I've never subscribed to either service. Until the market shakes up and gets unified, as opposed to all this fractured content, I don't see myself jumping on board to any particular service anytime soon.

For me, Netflix is the most used service - for TV shows and a few movies. For newer movies, it's Vudu. Somewhere in between is Hulu Plus with iTunes coming in dead last.

The primary reason is not that any or all is "better" than iTunes but that most of the devices I own have Netflix, Hulu, and Vudu clients built-in. I have an Apple TV 2 in the home theatre system but it's most used to stream content from my media PC...hundreds of movies, thousands of songs, and tons of photos.

I don't perceive any service as superior; they all have warts. That said, I have enough choices to not feel like I'm missing anything!

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

The rent-seeking approach of the studios is worsening the value propositions of all the streaming services, yet it doesn't compel me to buy or rent DVDs/BDs. I just end up not watching a movie.

We ditched Netflix for Amazon Instant Video because Netflix doesn't seem to have very much of the stuff we are interested in watching. I've never even used iTunes for video.

Amazon has the problem of being limited to the US only. Which is the other area Netflix has seen an improvement, they've at least expanded to some markets outside of the US, even though it's not all. The Canadian netflix is lacking in some ways, but better in others (it at least has season 1 of Community)

Plus it's a no-brainer for anyone who has kids, added to the fact they'll have Dreamworks films exclusively next year.

iTunes is better for accessibility too. Had a trip down memory lane with my girlfriend over the weekend and watched some Disney movies. iTunes was pretty much the only source that actually had them, you can't even seem to buy the proper version of Aladdin through Amazon's normal store (there are some sellers selling it for way too much, that's it). It's just a terrible piece of software to use on the desktop ("terrible" really begin to describe it either, it's atrociously bad), so it's always the last resort.

JEDIDIAH wrote:

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

This is the biggest problem with digital media, no one wants to let it loose without a massive pile of cash involved, so the cheapest way of getting it right now is buying a physical copy with a digital license attached.

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

I was a Netflix subscriber when you could get either streaming movies OR a movie in the mail for one low monthly fee.

When they got greedy and decided to charge for the two sevices separately I took a look at their streaming library (I searched for the past 5 years academy award nominees). Virtually none were available for streaming - but most, or all, were available thru the mail.

So now I just get mail order movies fromNetflix......

I also belong to Amazon Prime, but their (free) streaming library is equaly worthless.

Unfortunately, all of these services are going to come to a grinding halt. They may double again in 2012 but the trend will flatten quickly after that. The problem is broadband data caps. For example, uVerse caps at something like 250 GB month. Plenty in the past but start streaming all your HD video and you can blow past that. Get hit with a few overage charges and people will start to dump the subscription services.

If it wasn't for cartoons my son likes I'd have dumped Netflix by now. Seriously, their movie selection sucks beyond belief. I don't care whose fault it is, just someone needs to fix it. I might start checking out PSN and see how they are.

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

While true, that involves 1) going out and finding them and 2) actually wanting to store physical media anymore.

I'm trying to limit #2 as much as possible these days. And no, I don't really want to rip them and store them digitally, either.

Unfortunately, all of these services are going to come to a grinding halt. They may double again in 2012 but the trend will flatten quickly after that. The problem is broadband data caps. For example, uVerse caps at something like 250 GB month. Plenty in the past but start streaming all your HD video and you can blow past that. Get hit with a few overage charges and people will start to dump the subscription services.

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

While true, that involves 1) going out and finding them and 2) actually wanting to store physical media anymore.

I'm trying to limit #2 as much as possible these days. And no, I don't really want to rip them and store them digitally, either.

Physical media is very compressible if you aren't worried about the original packaging.

Older digital media is pretty compressible too.

The result is immune from data caps, poor network reception, and isn't restricted to any particular service or brand of playback device.

Unfortunately, all of these services are going to come to a grinding halt. They may double again in 2012 but the trend will flatten quickly after that. The problem is broadband data caps. For example, uVerse caps at something like 250 GB month. Plenty in the past but start streaming all your HD video and you can blow past that. Get hit with a few overage charges and people will start to dump the subscription services.

I honestly totally agree with this, I stream movies about 14hours a day on the weekends and I'm nowhere near my Uverse cap (though I'm told that some of the services made deals with AT&T like Amazon and Apple, so they don't actually count.)

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

I'm shocked that Amazon isn't on the list, I've enjoyed the service immensely, outright purchasing Top Gear and Doctor Who and a few other things to fill in the holes in Netflix. Netflix really works well for documentaries and kids's shows, and for a while I enjoyed a few tv series. But it feels very limited and something about their recommendation algorithms doesn't work well with such limited content, so discovery has started to be a surprising issue for me.

I really wish netflix/amazon would have a higher price tier with sports or recent movies, but given the realities of the cable monopolies, this will only happen through gov't fiat if at all. All that tax money you paid for arenas, whose sports and concerts footage you can't get for free! All those billionaire sports owners and cable CEOs you're actually subsidizing. Real smart, guys.

There's Netflix in my house but I rarely watch it, I don't think I've used it in the past two months. However, we have Hulu+ and that gets used on a regular basis, but Hulu is of course geared toward TV rather than movies.

This all just reminds me that the content companies are doing their hardest to make torrents, file lockers and usenet the best choices for anyone who just wants to watch shows or movies at a time and in a format that's actually convenient.

Netflix if they have it. Amazon for rentals - they support far more devices than iTunes does, they largely have the same content, and they're often cheaper. I could get an AppleTV, I guess, but I have multiple devices that do Netflix, Hulu and Amazon. The AppleTV only does Netflix and iTunes, so it's not competitive from a content standpoint.

I was a Netflix subscriber when you could get either streaming movies OR a movie in the mail for one low monthly fee.

When they got greedy and decided to charge for the two sevices separately I took a look at their streaming library (I searched for the past 5 years academy award nominees). Virtually none were available for streaming - but most, or all, were available thru the mail.

Netflix didn't get greedy, they had to raise prices to pay for new and much more expensive streaming licenses.

Their early cheap licenses expired, and it's the studios that got (very) greedy. Starz! allegedly said no to a $300+ million fee for licenses because it wasn't enough.

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I have Netflix streaming for TV shows and some movies, disc for other movies, and use Amazon instant to pay for anything if I'm too impatient to wait for it to reach Netflix.

I dropped my cable a year ago, and buying a show or two on Amazon now and then is still much cheaper than the $100 a month I used to pay.

Lucasfilm has always done this with the Star Wars movies, and DIsney has done it for decades. The only "new" instance of this behavior I have seen with high demand titles is WB threatening it with Harry Potter, and I', not sur ethat wasn't just to drum up demand for the 31 disc Ultimate Absurdity set they are releasing.

To be honest I've never subscribed to either service. Until the market shakes up and gets unified, as opposed to all this fractured content, I don't see myself jumping on board to any particular service anytime soon.

Isn't going to happen anytime soon. This fractured market is what the MPAA/Studios want. It allows them to pit one service against another to get the prices Hollywood thinks they should get, plus "reward" a service for playing the game by giving exclusives and such (a la the CD days with Target, Best Buy, etc).

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

While true, that involves 1) going out and finding them and 2) actually wanting to store physical media anymore.

I'm trying to limit #2 as much as possible these days. And no, I don't really want to rip them and store them digitally, either.

Physical media is very compressible if you aren't worried about the original packaging.

Older digital media is pretty compressible too.

The result is immune from data caps, poor network reception, and isn't restricted to any particular service or brand of playback device.

You seem to be missing the point.

I'm not interested in doing any of that work to maintain/expand/etc a collection. I feel no need to keep tons and tons of media on demand on the off chance that I get an itch to watch one particular thing. If I have that itch and the show isn't around, I do what I did before the Internet and just watch something else.

Lucasfilm has always done this with the Star Wars movies, and DIsney has done it for decades. The only "new" instance of this behavior I have seen with high demand titles is WB threatening it with Harry Potter, and I', not sur ethat wasn't just to drum up demand for the 31 disc Ultimate Absurdity set they are releasing.

Do you know of other popular movies this is being done for yet?

I was amazed to find that none of the major 3 streaming systems had Inception available when I was looking a week or two ago, FWIW.

Lucasfilm has always done this with the Star Wars movies, and DIsney has done it for decades. The only "new" instance of this behavior I have seen with high demand titles is WB threatening it with Harry Potter, and I', not sur ethat wasn't just to drum up demand for the 31 disc Ultimate Absurdity set they are releasing.

Do you know of other popular movies this is being done for yet?

Some things just go out of print. It's just like books and CDs. They stop making them. It's probably due to lack of demand. They soak the market for all it will take and then give up. If you are lucky, they might put things on deep discount before throwing in the towel.

Some companies will even change "fabs" going from one cut rate publisher to an even worse more-cut-rate publisher.

Then things get interesting as prices go up as stuff becomes scarce as it's not being made anymore.

Something going out of print is not always a sinister conspiracy. Just sometimes.

Lucasfilm has always done this with the Star Wars movies, and DIsney has done it for decades. The only "new" instance of this behavior I have seen with high demand titles is WB threatening it with Harry Potter, and I', not sur ethat wasn't just to drum up demand for the 31 disc Ultimate Absurdity set they are releasing.

Do you know of other popular movies this is being done for yet?

I was amazed to find that none of the major 3 streaming systems had Inception available when I was looking a week or two ago, FWIW.

I'm a long-time Netflix supporter in this comparison, but the studios have wised up some and withdrawn a lot of compelling, even if older, films. Netflix's catalog skews older (for movies) and toward television series. For theatrical releases, I find myself turning toward Amazon Instant Video more and more, though I've only dipped a toe so far - the key problem with the model is having to commit $3 to $5 for each movie you don't know you're going to enjoy; that's the upside of Netflix's subscription model.

And even more movies I know I'll enjoy - most anything Bond, the Bourne films, 48 Hours, Beverly Hills Cop II - all available on Amazon and nowhere to be found on Netflix, I find myself asking whether it's really worth $4 to re-watch what amount to "comfort cinema."

Many of these older films can be found for as little as $5 on DVD. So the idea of paying $4 to rent them seems a little silly.

While true, that involves 1) going out and finding them and 2) actually wanting to store physical media anymore.

I'm trying to limit #2 as much as possible these days. And no, I don't really want to rip them and store them digitally, either.

Physical media is very compressible if you aren't worried about the original packaging.

Older digital media is pretty compressible too.

The result is immune from data caps, poor network reception, and isn't restricted to any particular service or brand of playback device.

You seem to be missing the point.

I'm not interested in doing any of that work to maintain/expand/etc a collection. I feel no need to keep tons and tons of media on demand on the off chance that I get an itch to watch one particular thing. If I have that itch and the show isn't around, I do what I did before the Internet and just watch something else.

It's no big deal to have some DVDs lying around. If you are going to pay as much, or nearly as much, you might as well.

Otherwise, you might as well just use rabbit ears then.

If you genuinely "don't care", then they are an equally compelling option.

I almost exclusively use Netflix when I watch something nowadays. Either it's a Blu-Ray in the mail or it's something I fire up in the (improving) Instant Watch selection.

I don't mind watching old content....age doesn't make it worse in general. The thing that IW is best for is TV shows that you missed.

There's another conclusion mixed in here...and that's that when I go through and look for new movies that I want to watch, I have a really hard time finding anything compelling. Movies just in general suck now. You have a really hard time finding quality content in films. Give me something that's not a sequel or a reboot

To be honest I've never subscribed to either service. Until the market shakes up and gets unified, as opposed to all this fractured content, I don't see myself jumping on board to any particular service anytime soon.

Sounds like you'll never get what you're looking for. The movie studios have no reason to allow any one service to have everything they can offer. By picking and choosing which services they give their content to they can maximize their profit with online services which is becoming more and more important in an era when physical media is becoming a hard sell. Netflix and Amazon Prime get the old stuff (with very few differences between them) and all the VOD rental channels get the newer (or more desirable) material. Without some huge payout or other incentive offered by one service or another (and make no mistake, it would need to be staggeringly large) I don't see that changing.

I have Netflix to stream through my PS3 and it makes not having cable workable and it's way cheaper. Amazon's Prime streaming would work just as well. I sampled Amazon and found very little in difference between it and Netflix. Amazon has a few movies Netflix doesn't and vice versa and most TV shows are available on both. And if I really, really need to see something new that Netflix doesn't have I can rent it off the PSN or Amazon for a few bucks.